ARUNA MILLS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference pertains to the asst. yrs. 1958 1959 and 1959 1960 of which the relevant previous years were the calender years 1957 and 1958 respectively and raises a short question whether the assessee company was entitled to development rebate under S. 10(2)(vib) of the Indian IT Act, 1922, in respect of the cost of certain spindles purchased by the assessee company at Rs. 25,063 and Rs. 67,980 respectively in the two account years.

(2.) THE assessee company carried on at all material times the business of manufacturing and selling cotton textiles. In the two accounting years, namely, calendar years 1957 and 1958, the company replaced ordinary spindles by roller bearing spindles at the cost of Rs. 25,063 and Rs. 67,980 respectively and debited these amounts to the machinery repairs account. The company claimed that the expenses incurred on these spindles having been held to be of a capital nature in the previous years, it was entitled to development rebate under S. 10(2)(vib). Both the ITO and the Asstt. CIT rejected the claim and on a further appeal to the Tribunal, the Tribunal also rejected the claim on a concession made on behalf of the assessee company that the roller bearing spindles could not run by themselves and that they had to be put to use in conjunction with the other machinery in the company's mills. The Tribunal held that the roller bearing spindles were, in view of the aforesaid concession, not self contained units capable of being put to use in the business for the benefit of which they were installed, and rejected the claim for the development rebate on that ground.